What characterizes conglomerate diversification?

Conglomerate diversification is characterized by a company's strategy to enter new markets or industries that are distinct from its current operations, primarily through the acquisition of companies that provide promising investment opportunities. This approach allows firms to expand their portfolio beyond their existing product lines and markets, typically aiming for synergistic benefits, risk reduction, and revenue growth. By investing in different sectors, companies can also counterbalance downturns in their primary markets.

The other options reflect different strategies. Focusing on existing products in new markets pertains to market penetration and geographic expansion rather than diversification into unrelated sectors. Improving efficiency in production processes aligns more with operational strategies aimed at cost reduction and productivity, rather than diversification. Finally, creating new related products describes a product development strategy or a form of horizontal diversification, where companies expand within their existing product lines rather than venturing into entirely new industries.